Morgan Chittum

<div id="highlights-block_621cfe7a9bccb" class="highlights">
 <ul>
 <li>Seoul aims to become the first city to enter the metaverse, Mayor Oh Se-hoon said last November</li>
 <li>The country does not currently permit the use of NFTs or token issuance in gaming</li>
 </ul>
 
</div>



South Korea will spend at least $186.7 million, or 223.7 billion Korean won, to create its metaverse ecosystem, according to a <a href="https://doc.msit.go.kr/SynapDocViewServer/viewer/doc.html?key=dcc6cbad6011442e8caf03550a0e7ea7&amp;convType=html&amp;convLocale=ko_KR&amp;contextPath=/SynapDocViewServer/" target="_blank" rel="noreferrer noopener">statement</a> from the country’s Ministry of Science and Information and Communications Technology. 



The investment is a part of South Korea’s “Digital New Deal” — a set of policies that aim to help build out emerging digital technologies such as the metaverse and artificial intelligence platforms.



“It is important to create a world-class metaverse ecosystem as the starting point to intensively foster a new hyper-connected industry,” Park Yungyu, the ministry’s head of communication and policy, said in a translated statement.



The government agency said the capital will go toward the metaverse in particular, which it hopes will become a platform enabling industries and businesses to thrive.&nbsp;&nbsp;



The metaverse has the potential to create 1.5 million jobs, and the country plans to produce over 40,000 professionals that specialize in the nascent space, the ministry <a href="https://cms.blockworks.co/south-korea-could-take-over-the-metaverse-through-gaming-industry-players-say/" target="_blank" rel="noreferrer noopener">stated in January</a>. South Korea’s government, at the time, endeavored to make the country the fifth-largest metaverse market by 2026.



“I’m very much keen to believe that Korea is positioned to become one of the biggest metaverse players,” Alex Salnikov, co-founder at NFT marketplace Rarible, <a href="https://cms.blockworks.co/south-korea-could-take-over-the-metaverse-through-gaming-industry-players-say/" target="_blank" rel="noreferrer noopener">previously told Blockworks</a>.



In an effort to push the country to the top of the global metaverse market, the Seoul Metropolitan Government <a href="https://www.euronews.com/next/2021/11/10/seoul-to-become-the-first-city-to-enter-the-metaverse-what-will-it-look-like" target="_blank" rel="noreferrer noopener">announced</a> that it wanted to build “Metaverse Seoul” last November.



By 2023, Seoul aims to create a metaverse where citizens can deal with civil complaints and consultations — virtually. Using virtual reality headsets, citizens could visit a virtual city hall as avatars instead of having to go in real life.



Seoul aims to become the first city to enter the metaverse, the capital’s mayor, Oh Se-hoon, said last November.



“The &#8216;Metaverse Seoul&#8217; initiative announced last year, and the commitment by the South Korean government to lead the global metaverse race in five years, certainly puts the country at the forefront,” Noah Gaynor, co-founder of metaverse startup Parcel, said to Blockworks. “But based on what we&#8217;re seeing, and the decentralized nature of the open metaverse, no single country or organization will rule the metaverse. This is a truly global movement with no geographical boundaries.”



The metaverse, however, is commonly associated with cryptoassets such as NFTs (non-fungible tokens). South Korea currently prohibits the use of any NFTs or token issuance in its gaming — which may pose a threat to its ambitious metaverse plans.



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South Korea To Pour $187M Into ‘World-class Metaverse Ecosystem’

<div id="highlights-block_62042cb854de0" class="highlights">
 <ul>
 <li>Arcade, an NFT lending platform, has more than $20 million of NFTs in escrow</li>
 <li>Nexo, a cryptocurrency lender, introduced its NFT-backed lending desk last year</li>
 </ul>
 
</div>



Wealthy individuals, long accustomed to taking out loans against Picassos and van Goghs, are now tapping Bored Apes and CryptoPunks as stores of cash.



In the latest sign that digital art and collectibles are coming into the financial mainstream, one NFT collector put up two rare Zombie CryptoPunks this week as collateral for a $3-million loan facilitated by peer-to-peer lender <a href="https://www.arcade.xyz" target="_blank" rel="noreferrer noopener">Arcade</a>.



The NFT (non-fungible token) platform specializes in matching blockchain art owners with would-be lenders. Arcade has more than $20 million of NFTs in escrow, according to CEO Gabe Frank.



Arcade’s financing terms, Frank said, are comparable to fine art lending — a market where hedge funds and other asset managers underwrite loans on the behalf of art-collecting high-net worth individuals. Bank of America, for instance, has more than $10 billion of such loans.



“It looks very similar to that model in that high-net-worth collectors want to use their locked up capital more efficiently,” Frank said. “[For them], it comes down to capital efficiency, being able to leverage [their] assets and either buy more NFTs or invest elsewhere to earn a higher rate than an interest rate on a loan.”



The model tosses credit checks and reserve assets out the window, considering both borrower and lender settle the loan trustlessly, employing self-custody and keeping the transaction on-chain.



Arcade’s loans typically last three months and charge 20% interest annually — less than credit cards, but still steeper than other bank loans. The fees vary, in part depending on an NFT’s liquidity.



“That&#8217;s kind of our niche, that high-end, longtail market,’ Frank said. “We provide this (over-the-counter) type of service for high-net-worth collectors that want to collateralize their assets. It looks similar to something that Sotheby’s does.”&nbsp;



Noah Gaynor, CEO of NFT marketplace Parcel, told Blockworks it’s another sign that “various protocols and primitives [are] bridging DeFi and NFTs.”



Added Gaynor: ”NFTs should be treated the same as any other asset, which includes using them as collateral.”



Arcade supports exclusively ether-based NFTs, with acceptable collateral ranging from plots of virtual land to blue-chip collections such as <a href="https://cms.blockworks.co/?s=bored+ape" target="_blank" rel="noreferrer noopener">Bored Ape Yacht Club </a>and <a href="https://cms.blockworks.co/?s=cryptopunk" target="_blank" rel="noreferrer noopener">CryptoPunks</a>.



“We think that [around] 95% of the NFTs are probably not worth anything,” Frank said. “But it&#8217;s the top 5% like the CryptoPunks and the Apes that have billions in market cap that do have a lot of staying power.”



Other crypto companies are following suit in the NFT lending game.



Crypto lender <a href="https://nexo.io/wallet?utm_source=google&amp;utm_medium=cpc&amp;utm_campaign=google_search_brand_wallet_q122&amp;utm_term=general&amp;utm_content=search&amp;gclid=CjwKCAiA6Y2QBhAtEiwAGHybPRvsorE0rpkyMdnmWA8NrGvQwSQ9Nu1HzWmwRGW_B3U91nX1idSZqBoCSKgQAvD_BwE" target="_blank" rel="noreferrer noopener">Nexo</a> started its first NFT lending desk in December, likewise accepting Bored Apes and CryptoPunks for collateral.



“An NFT can be anything and can provide so many functions,” Antoni Trenchev, co-founder of Nexo, told Blockworks. “[In the future,] we’ll be providing loans and financing people’s purchase against anything from digital real estate, to gaming items, or even limited edition Nike sneakers.”



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